Tuesday, November 22, 2005

Goldman Sachs Officially Goes Green

From the New York Times via the Private Sector Development Blog, news of investment banking powerhouse Goldman Sachs' announcement of a policy "that details how its 24,000 employees - be they bankers, analysts or purchasing agents - should promote activities that protect forests and guard against climate change."

Goldman, which counts paper companies, refiners and car companies among its clients, stopped short of saying it would reject clients with questionable environmental practices. Instead, it said it would "encourage" clients in "environmentally sensitive" areas to use "appropriate safeguards."

It committed itself to investing $1 billion in projects that generate energy from sources other than oil and gas. And it strongly endorsed stringent federal regulation.

Goldman said it would establish a Center for Environmental Markets to study how the free-market system can solve environmental problems. Henry M. Paulson Jr., Goldman's chairman, said the center - which will cost $5 million to set up and will be operating within six months - would help shape public policy.

"We don't have a lot more time to deal with climate change," said Mr. Paulson, an outspoken environmentalist who is also chairman of the Nature Conservancy. "We need the right balance between regulation and market-based approaches."

Environmental organizations are applauding Goldman's announcement, and claiming it goes well beyond other recent moves by other financial institutions:

This year, J. P. Morgan Chase set out strict environmental dos and don'ts for each part of its business. And Merrill Lynch now includes environmental issues in the due-diligence checklist its bankers use before underwriting stock issues.

"They are spending intellectual capital and energy on finding market-based solutions to environmental problems," said Michelle Chan-Fishel, program manager for green investments at Friends of the Earth.

Jonathan Lash, president of the World Resources Institute, was more blunt. "Goldman has given us things to measure them by," he said.

Congratulations to Goldman Sachs for not only taking a positive environmental move, but also for recognizing the investment potential in sustainability. While it would be nice if they went completely green and did "reject clients with questionable environmental practices," this should go a long ways towards showing those companies the benefits of embracing green business practices.